Being an Entrepreneur at SFU by Basil Peters

Being an Entrepreneur
at SFU
Presented to SFU
Engineering
July 25 25, 2006
By Basil Peters

My y Goals Today y
• I’d like to change your life.
• And possibly make you a ridiculously large
amount of money.
• Well, some of you anyways.
• I believe more students students, staff and faculty at
universities should start companies.
• I did and it worked out well for me me.
• To put my comments in perspective, I need to
start by telling you my story story.

My y Decade at University y
• BCIT Diploma of Technology, 1973 (top of class)
• UBC BASc Electrical Eng, 1977 (top of class)
• UBC Ph.D. in Electrical Engineering, g g, 1982
• Won 8 scholarships including UBC’s top (then)
• El Elected t d three th times ti tto the th Board B d of f Governors G
• Led the UBC Engineering Project to build an
El Electric t i VVehicle hi l
• Also taught full 4 yr course in Electrical
EEngineering i i at t SFU ffor 3 years

UBC Electrical Vehicle Project j
• Back in the 70’s the UBC
EEngineers i always l bbuilt ilt
cars.
• Startedasawaytoavoid
Started as a way to avoid
a summer job.
• Ended up as UBC's UBC s largest
student project (then).
• Our project won 2nd Our project won 2 prize
in a worldwide competition
by Intel.
• = Entrepreneur training.

Recommendation
• University provides wonderful of opportunities
beyond the classroom.
• Yeah, , I know you y think you y are too busy y already. y
• Get involved in:
– Student projects
– Student politics
– Something g outside yyour core department p
– Any activity to broaden your perspective

Number
of Companiees
14
12
10
8
6
4
2
0
UBC Spin Spin-off off Companies
92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03
Number of Companies Number of Jobs
3000
2500
2000
1500
500
mber of Jobs
1000 Num
0

Keep this picture in mind.
I believe UBC’s UBC s contribution is actually
much more significant.

UBC Spin-off Spin off Companies
S Summary Statistics S i i
� 113 spin-off companies
� 92% of companies p located
in British Columbia
� 2,500 jobs created
�� Investment
• UBC - $15m
• Government - $45m
• Pi Private t - $1 $1.5b 5b
Closed
26%
M&A
9%
Early Stage
14%
Physical
Science
36%
Active
51%
Info Tech
18%
Life
Science
46%
!

So Why y Am I Not a Happy ppy Guy? y
• I don’t even understand this bugs and drugs stuff.
• I am a TECH guy
• So what’s going on at UBC?
• What follows are my ideas alone.

Case Study y #1 – Professor
• John MacDonald was still a professor in here in
Electrical Engineering when I started as a student.
• Started MDA with a friend who was an Engineer g at
the UBC computing center.
• (John) MacDonald & (Vern) Dettwiler
• TOP 16 B.C. TECH Cos BASED ON REVENUE (2003)
• 1 Creo inc.
2 MacDonald Dettwiler & Assoc (2500 employees)

Case Study y #2 - Student
• I started Nexus Engineering with an E&E
classmate, from the Electric Vehicle project.
• While we were both still grad g students here at
UBC.
• Grew to 7 companies, companies 350 employees in 6
countries.
• Second largest manufacturer of headends in the
world.
• SSold ld tto SScientific i tifi Atl Atlanta t in i 1993 f for $$$ $$$.

My y first experience p
• Entrepreneurial experience.
• We were SO naïve.
• I now literally laugh at our original structure and
financing agreements.
• Nevertheless, we grew to be #2 in the world.
• Single biggest reason: Our Mentors (please also keep
g gg
this in mind.)

Recognized g as Entrepreneurs p
• At Nexus we won
9awardsfor
9 awards for
entrepreneurship
Including:
- Entrepreneur of
the year
- Silver medal in
Entrepreneurship
from Canada Awards
- Business Leader
of the year
- UBC and BCIT
Alumni Awards

Generating g lots of media attention
Which generated several unsolicited proposals of marriage

What John MacDonald Taught g Me
• When I was a young entrepreneur,
• John MacDonald, then still CEO of MDA,
• Told me how proud he was of the MDA Spin Out
companies.
• I thought he was out of his mind.
• Because I was scrambling g every y day y to hire more
engineers and new grads.
• But now see that he was right.

BC Tech Map p
1997

BC Tech Map p
2003

BC Tech Map p
2003 - MDA

I consider MDA a UBC Spin p
Out

BC Tech Map p
2003 – Nexus

Nexus is also a ‘UBC Spin p
Out’

Many of these started at UBC

Is it better in the Valley? y
• I grew up in Vancouver.
• I am a techie so always thought it was bigger and
brighter in Silicon Valley.
• For 2.5 years the mid-1990’s I was the CEO of a
mid sized tech company right in Silicon Valley.
• Conclusion: its bigger but not better.
• We even have some advantages – ii.e. e currency currency.
• Biggest thing holding us back is our self
confidence confidence.

My y Day y Job Now
• In late 2002, I co-founded BC Advantage Funds.
• Now 3 funds with $30 million.
• Core part of our mission is to invest in university
spin outs.
• And make professors and students a ridiculously
large amount of money,
• along with our shareholders.
• And have fun and put something back.

Making g University y Millionaires
• BC Advantage Funds’ first investment – UVIC spin
out t – PProtox. t
• Made Professor Tom Buckley a millionaire (public info).
• My most recent investment – Sensific – UVIC.
• Professor Tom Fyles head of Chemistry at UVIC UVIC.
• I have also invested in Brightside - started by
Professor Lorne Whitehead Whitehead, UBC VP Academic. Academic
• Also the founder of TIR and two other UBC spin
outs outs.

My y Goal
• I hope that some of you start companies.
• Sooner rather than later.
• With others from SFU SFU.
• I encourage you to work with the UILO.
• Don’t let anything get in your way.
• Build a team.
• Find some mentors.
• Make a ridiculous amount of money money.

When should you y start?
• Try hard not get a ‘real’ job first!
• Do it early in life.
• Being a student is excellent training:
- used to working long hours
- for no money (i (i.e. e already used to starvation)
- not yet risk adverse (because you have no money)
- willing g to roll the dice double or nothing g every y
day (because you are too young to know any better)

OK, , but what about you? y
• The real question is whether it’s right for you.
• Should you even try?
• Shouldn’t everyone try?
• No, it can easily ruin your life.
• How much is genetic and what can be learned?

Some discriminating g tests
• Hot stove test.
• Is the glass half full?
• See around the mountain mountain.
• Perseverance.
• Work with teams.

Characteristics of Entrepreneurs p
• Lots written by VCs
• You may not like some of it.
• Sample characteristics:
- first born
- entrepreneurial family
- incredibly persistent
- intuitive
-OCD
- weird relationship with father

Entrepreneurial p Teams
• An individual can’t be perfect.
• But a team can come close.
• There are exceptions (like Jim Pattison and Ted
Rogers).
• Investors only back teams.

Entrepreneurship p p is not taught g
• It’s learned.
• Universities are starting to try.
• But today, today its still more of an apprentice program. program
• Often entrepreneurs come from entrepreneurial
families.
• I want to expand p that subset.
• My belief: “All successful entrepreneurs have good
mentors.” mentors.

Mentors
• The most important controllable factor in your
success.
• Ideal team includes some grey g y hair and some
serious entrepreneurial scar tissue.
• Good ones not easy to find or to get sucked in in.

Why they might make you rich
• How it worked for us at Nexus.
• What it feels like after you make your first
$million. $
• What’s still fun?
- vicarious business thrills
- management - NOT
• Passages and symbiotic relationships
relationships.
• Could always use a few more $million and
what h t else l would ld you d do anyway?
?

Mentors – The difference between
success and failure
• A good Mentor’s most important contribution is:
• To prevent the entrepreneurs from blowing up the
company. p y
• Seriously.
• In my first company, our angel investors / mentors
/ directors literally prevented that a dozen times.
• In my own investments, have done the same
several dozen times.

How can they y do that?
• It’s experience.
• For example, many companies fail because they
run out of money. y
• That almost never happens to experienced
entrepreneurs
entrepreneurs.
• Even a founder with an IQ of 160 can’t learn
enough enough, fast enough enough, to have the experience experience.
• Every successful company I have seen has
mentors t / good d directors.
di t

The Business Plan
• Very simply – an intelligence test.
• The format must be perfect.
• If you have a web browser, browser there is no excuse excuse.
• The financials are the hardest part.
• Except possibly for the bios.
• If you’ve only done a couple of dozen get
• If you ve only done a couple of dozen, get
coaching!

The Topic p Doesn’t Matter Much
• Many very successful companies don’t execute
th their i original i i l bbusiness i plan. l
• Pivotal – started as a pen based software
company, bbut t ended d d up as a CRM company.
• Creo – started building high capacity tape storage,
bbut t ended d d up making ki printing i ti plates. l t
• ALI – started up doing breast mammograms and
ended d d up iin medical di l iimaging i storage. t
• Get the right people on the bus (Read: “Good to
GGreat.”) t ”)

Getting g an Investor’s Attention
• What it looks like from my perspective.
• Dozens of business plans per week.
• You need an introduction
introduction.
• Ideally from someone who has written a cheque.
• And has credibility with me.
• Ideally one of our fund’s fund s mentors mentors.
• Sorry it’s not easier.

What is MOST important? p
• OK, you have a bunch of entrepreneurs...
• What is most important in determining whether
you y will make really y BIG $ in yyour
first
entrepreneurial venture?
- management?
- innovation?
- hard work?
- luck?

LUCK!
• WWas a bit of f a trick t i k question. ti
• Zero doubt that this is the correct answer.
• Various proofs available:
- Bill Gates: $ vs IQ standard deviation
- millions of individual examples

Right g Place at the Right g Time
• Have to get two things right.
• Its hard.
• It’s mostly luck when you are young. young
• Just can’t accumulate the knowledge to
consciously position yourself.
• That’s what old guys g y always y say…. y
(the stove)

How I blew it the first time
• Prototypical techie nerd in the basement.
• Just had to build stuff.
• Vision of production line line.
• Genetic defect common to engineers.
• Never listen anyway.
• I guess I just had to learn the hard way way.

Getting g it right g the next time
• Being in the right place at the right time can be
learned. (Terry Mathews more than Mike Copeland.)
• The right g timing g is much harder.
• The “Year of the LAN” for over 5 years.
• You can see into the future -- if you think about it
hard enough.
• Its actually pretty easy -- just takes a really long
time to learn how.

Eras of Opportunity pp y
100
0
1970 19
1974 19
1978 19
1982 19
1986 19
1990 19
1994 19
1998 19
2002 20
2008 20
2012 20
2016 20
2020 20
Hardware
Software
Networks
Services

What else is important? p
• How else can you improve your chances of
making really big $?
• Second most important p lesson:
• Try not to ‘blow your brains out’.

200 Fatal Mistakes
• Probably about 200 common mistakes that
entrepreneurs make in the first few years.
• Unfortunately, y, most are fatal.
• Most companies try to make a dozen or so.
• They are not in a book or CD.
• That’s another reason why chances of great
y g
success are so small.

Some good g news
• The mistakes can be learned.
• The hard way (common path for entrepreneurs -
remember the stove.)
• Go broke a few times (Jimmy and Ted almost did
a couple of times times.) )
• There is a much better and faster way.

Other important p lessons
• Do not run out of money.
• All investment capital comes with costs and
conditions that are worse than you y can possibly p y
imagine (and that you probably won’t understand
until its too late).
• You have to sell what you make.
• 197 other lessons for another day day…..